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The Effects of U.S. Federal Payments on the Agriculture Sector – Food Tank

U.S. federal aid payments were estimated to account for 40 percent of total net farm income in 2020. But many farmer organizations say that the federal aid is insufficient and does not support long-term sustainable solutions. Instead, these organizations are advocating for revenue-based payments, greater loan forbearance, and climate change mitigation. 

“This year, farmers and ranchers faced the perfect storm of challenges,” Dale Moore, Executive Vice President of the American Farm Bureau Federation (AFBF), tells Food Tank. “[Farmers] came into the year already facing a down farm economy due to low prices, natural disasters, and ongoing trade issues.”

Over the past four years, the Trump administration has given out a record amount of federal aid to farmers, amounting to a total of US$46 billion. Of that, the U.S. Department of Agriculture (USDA) gave out more than US$23 billion in trade-related aid through the Market Facilitation Program (MFP), established under the USDA’s Commodity Credit Corporation.

The USDA calculated MFP payments by a per commodity price multiplied by the yield of that producer, Eric Deeble, Policy Director at the National Sustainable Agriculture Coalition (NSAC), tells Food Tank. He explains that this hurt small farmers because they received compensation at a lower wholesale rate compared to their normal export commodity prices. 

Throughout the pandemic, farmers and ranchers received aid from the Trump administration through the Coronavirus Food Assistance Program (CFAP), given out in two phases. The most recent payment came in September. The aid benefits farmers and ranchers whose operations are directly impacted by COVID-19.  The USDA Farm Service Agency has already approved more than US$7 billion to producers with CFAP II. 

While the first phase, CFAP I, was criticized for benefiting large farmers, the USDA sought to reach more small-scale farmers with CFAP II, Rob Larew, President of the National Farmers Union (NFU), tells Food Tank. CFAP II also provides an option for farmers to receive payments based on their revenue, further helping smaller diversified farms. 

Despite COVID-19 support and subsidy payments, the federal aid is not expected to continue at the same rate. The Food & Agriculture Research Institute (FAPRI) of the University of Missouri finds that baseline updates for U.S. agriculture markets estimate federal farm payments will fall from US$32 billion this year to US$16 billion in 2021. The analysis also estimates that without a strong economic recovery, farm income will decrease by more than US$10 billion.

Some, like AFBF, believe that the subsidy payments are crucial to protecting farmers during the hardships they face. “No one buys insurance for the good times,” Moore says. “Farm bill programs are designed to provide stability to our nation’s critical agriculture industry, which faces several factors beyond our control from market shifts to natural disasters.”

But Larew says that in the long-term, tariff and pandemic assistance are not sustainable ways to keep farmers in business. NSAC and NFU argue that in addition to financial support, the USDA should implement loan payment deferrals, payment forbearance, and deadline extensions.

“[The] USDA has a great deal of authority which they could use to defer payments for farmers,” Deeble tells Food Tank. “We would like to see them implementing [tools] immediately to take some of the pressures off farmers who are struggling.”

Advocacy groups also argue that new solutions are necessary to support farmers as climate change advances. According to the National Climate Change Assessment of 2018, climate change is likely to make it harder to grow crops and to make crops that do grow more vulnerable to diseases and pests. Farmers will collectively have to spend billions of dollars to adapt. 

“We can be serious about paying farmers for the environmental services they provide,” says Deeble. “Agriculture can put more carbon in the ground and pull out more greenhouse gasses (GHG) than [farmers] put out if we collectively decide to invest and support those practices.”

For the NFU, long-term solutions mean ensuring farm profitability by addressing overproduction and enforcing antitrust regulation. The organization is advocating for incentive-based programs that encourage climate-smart practices, public climate research, and rejoining the Paris Climate Accord. 

“Though trade and pandemic assistance programs have played a crucial role through the last few years of economic uncertainty, it’s clear that this is not a sustainable way to keep farmers in business,” Larew tells Food Tank. 

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